Wall Street is heading for a sharp plunge at the start of the week following news that China has hit back against the United States with a new round of tariff hikes.
The Dow Jones Industrial Average plunged more than 500 points on Monday morning, while the S&P 500 and the Nasdaq Composite dropped 1.5% and 2.6%, respectively.
Footwear stocks including Nike Inc., Steven Madden Ltd. and PVH Corp. — parent to Tommy Hilfiger and Calvin Klein — were also down more than 2% in morning trading as shoe companies have begun to feel the heat of President Donald Trump’s latest tariff threats.
On Friday evening, Trump ordered U.S. Trade Representative Robert Lighthizer to start the process of raising levies on almost all remaining imports from China, valued at about $300 billion.
Washington’s tariff increase from 10% to 25% on $200 billion in Chinese imports has led to retaliatory measures. Beijing today announced plans to set new tariffs of 5% to 25% on $60 billion of U.S. imports, targeting about 5,000 products and kicking in as soon as June 1.
Trump took to Twitter early Monday morning to defend his trade approach.
In a three-part tweet, he wrote: “Their [sic] is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today … Also, the Tariffs can be completely avoided if you by [sic] from a non-Tariffed Country, or you buy the product inside the USA (the best idea). That’s Zero Tariffs. Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!”
He added: “There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate — will only get worse!”
Imploring Chinese President Xi Jinping, Trump wrote, “China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!”
The comments come a week after the U.S. and China failed to reach an agreement to end their yearlong tariff dispute. If the Trump administration makes good on its threat, the tariffs will eventually impact footwear, with companies and consumers eating that cost.
“These added tariffs will drive up shoe prices for U.S. consumers, take away disposable income and hit working-class individuals and families the hardest,” Footwear Distributors and Retailers of America president and CEO Matt Priest previously told FN. “Higher costs for our consumers means we sell less shoes. This threatens jobs in our industry and could put U.S. footwear companies out of business.”
Watch the highlights at the 2018 FNAAs.
Trump’s New Shoe Tariff Threat: Analyzing the Price Increases That Could Hit Consumers
‘As an Industry, We Cannot Survive’ — Fashion Reacts to Trump’s New China Tariff Hike
How Retailers and Wall Street Are Responding to Trump’s Latest Tariff Threat